Achieving Great Customer Experiences for Airlines. Really???

Almost no-one (other than for the kids customer segment) look forward to the flying experience. Much of a traveler’s experience is outside of an airline’s control and unfortunately for airlines, customers take their experience across the entire travel lifecycle into account while rating their airline experience. And most of it is never pleasant. Poor airport experiences, increased government security measures, long security check queues and the surrounding businesses that accompany travel may detrimentally affect a travelers’ experience.

Therefore achieving complete customer experience in the Airlines space is still a near-fantasy. Forrester’s assessment on customer experience quality scores airlines at an average of 66 with the industry being ranked 8^th overall.

Figure: Ranges of Customer Experience Quality within and across 13 Industries Customer Experience Maturity Defined (A Forrester Report)

To aggravate the problem further, airlines today are struggling with margins and the profit airlines make today on a flight seat is only about 2.5 USD.  Airline costs have escalated and with increased competition amongst themselves, customers found it easy to switch loyalty in case a fare was being delivered at a compelling enough discounted price point. In this Wall Street article, it takes about 100 passengers on a flight to just cover its costs.

Does that mean that the situation is hopeless? No and actually, there is much an airline can do. Firstly, they be able to assure a traveler almost never undergoes a negative customer experience while flying with them. And when that rare moment does happen, the airline company needs to acknowledge the service exception and respond pre-emptively, even before the customer becomes aware of the situation. For example, if a flight delay causes baggage to be left behind on a connecting leg, proactive communication and compensation must be delivered immediately.

Secondly, airlines need to deliver relevant personalized messages to their customers across all touch-points. Customers want to be reached out to but only with relevant messaging. A leading European airline company has a 66% click-through rate of email communication sent to its customers. Of this, 99% respond to these offers positively. For an airline to be able to replicate such success, they must have a complete and unified view of the customer first.

Thirdly, airline companies need to re-invent their loyalty programs such that they help airline companies maximize their profits from their best set of customers. Airlines were the first to introduce full-scale loyalty programs with only one objective: acknowledge and reward their best (read as profitable) customers so that they could ensure better profitably.  Somewhere along the way, these programs lost their effectiveness. In the US, it is only of recent that airline companies are moving from a mile based frequent flier based program to a revenue base program or a hybrid program, to ensure they reward their high value customers better. Loyalty programs also need to extend themselves onto the entire travel ecosystem such as hotels, car rentals, spas and even local transportation. About 18 billion USD worth of loyalty points expire due to non-redemption every year, which means that customers aren’t as engaged to the loyalty programs as much. It is imperative therefore that airline companies understand that loyalty programs are not an end in itself but only serve as a foundation to achieve that elusive long lasting customer loyalty.

The figure below summarizes all this best. Achieving customer loyalty, personalization and creating an unified customer 360 view are imperative towards attaining the goal of exceptional customer experience. Today, 76% of organizations are declaring to have or embark on a formalized customer experience program.

Figure: TCS Commissioned Forrester survey results stating drivers for Customer Experience Programs